China Finance Online Co. Limited (NASDAQ GS: JRJC), a leading web-based financial services company

China Finance Online Co. Limited (“China Finance Online”, or the “Company”, “we”, “us” or “our”) (NASDAQ GS: JRJC), a leading web-based financial services company that provides Chinese retail shareholders with fintech-powered online access to securities trading services, wealth administration products, securities investment advisory services, in addition to financial database and analytics services to institutional customers, recently declared its unaudited financial results for the second quarter and first six months ended June 30, 2019.

Second Quarter 2019 Financial Highlights

  • Net revenues were $8.9 million, in which revenues from the financial advisory business grew 82.6% year-over-year, revenues from advertising grew 60.2% year-over-year, and gross margin was 63.1%
  • Net loss attributable to China Finance Online was $3.0 million, contrast with a net loss of $4.3 million in the second quarter of 2018
  • During the second quarter, the impact from economic environment and equity market slowed down the Company’s progress of business improvement
  • The Company’s operational metrics continued to improve and operation efficiency continued to increase
  • The Company continued investment in fintech started to show results

First Six Months of 2019 Highlights

  • Net revenues were $18.8 million
  • Net loss attributable to China Finance Online was $5.7 million, contrast with a net loss of $9.5 million in the first six months of 2018
  • Built upon our development of a proprietary intelligent asset allocation system, Lingxi produced an average return of 6.15% and an average drawdown rate of 3.07% during the first six months of 2019, among the best performing products in the marketplace.

 

Second Quarter 2019 Financial Results

Net revenues were $8.9 million, contrast with $12.9 million during the second quarter of 2018 and $9.9 million during the first quarter of 2019. During the second quarter of 2019, revenues from financial services, the financial information and advisory business, and advertising services contributed 46.7%, 32.1% and 20.9% of the net revenues, respectively, contrast with 46.4%, 43.8% and 9.0%, respectively, for the corresponding period in 2018.

Revenues from financial services were $4.2 million, a decrease of 30.5%, contrast with $6.0 million during the second quarter of 2018 and $4.5 million during the first quarter of 2019. The year-over-year decrease of revenues from financial services was mainly because of a decline in the equity brokerage business.

Revenues from the financial information and advisory business were $2.9 million, contrast with $5.7 million during the second quarter of 2018 and $3.2 million in the first quarter of 2019. The year-over-year decrease of revenues from the financial information and advisory business was mainly attributable to the decrease in subscription revenues from individual customers. For the long-term growth prospects of our individual subscription business, we have streamlined our sales team and upgraded our business operations in the second half of 2018. On the other hand, revenues from financial advisory business, a sub part of the financial information and advisory business, grew 82.6% year-over-year.

Revenues from advertising services were $1.9 million, contrast with $1.2 million in the second quarter of 2018 and $2.0 million in the first quarter of 2019. The raised traffic to our site and readers’ recognition of our premium content also assisted to elevate our advertising revenues on a year-over-year basis.

Gross profit was $5.6 million, contrast with $8.5 million in the second quarter of 2018 and $6.4 million in the first quarter of 2019. Gross margin in the second quarter of 2019 was 63.1%, contrast with 65.5% in the second quarter of 2018 and 64.5% in the first quarter of 2019. The year-over-year and quarter-over-quarter decreases in gross margin were mainly because of the decrease of revenue contribution from individual subscription services.

General and administrative expenses were $2.5 million, a decrease of 16.4% from $3.0 million in the second quarter of 2018, and a decrease of 6.6% from $2.7 million in the first quarter of 2019. The year-over-year and quarter-over-quarter decreases were mainly because of effective cost control measures and the ongoing streamlining of the operations.

Sales and marketing expenses were $3.8 million, a decrease of 41.7% from $6.6 million in the second quarter of 2018, and a boost of 6.9% from $3.6 million in the first quarter of 2019. The year-over-year decrease was mainly attributable to the further streamlining of the sales and marketing division and improved operational efficiency.

Research and development expenses were $2.6 million, a decrease of 32.2% from $3.8 million in the second quarter of 2018 and with no noteworthydifference from $2.6 million in the first quarter of 2019. The year-over-year decrease was mainly attributable to improved efficiency after the consolidation of the R&D team. The Company continues to maintain a team of senior software engineers, data scientists and capital market professionals to support further development in its fintech capabilities.

Total operating expenses were $8.9 million, a decrease of 33.3% from $13.4 million in the second quarter of 2018, and no noteworthydifference from $8.9 million in the first quarter of 2019. The year-over-year decrease was mainly because of improved operational efficiency and effective cost control.

Loss from operations was $3.3 million, contrast with a loss from operations of $4.9 million in the second quarter of 2018 and a loss from operations of $2.5 million in the first quarter of 2019.

Net loss attributable to China Finance Online was $3.0 million, contrast with a net loss of $4.3 million in the second quarter of 2018 and a net loss of $2.8 million in the first quarter of 2019.

Fully diluted loss per American Depository Shares (“ADS”) attributable to China Finance Online was $0.13 for the second quarter of 2019, contrast with fully diluted loss per ADS of $0.19 for the second quarter of 2018 and fully diluted loss per ADS of $0.12 for the first quarter of 2019. Basic and diluted weighted average numbers of ADSs for the second quarter of 2019 were 23.0 million, contrast with basic and diluted weighted average number of ADSs of 22.8 million for the second quarter of 2018 and for the first quarter of 2019. Each ADS represents five ordinary shares of the Company.

First Six Months of 2019 Financial Results

Net revenues for the first six months of 2019 were $18.8 million, contrast with $26.2 million in the first six months of 2018.

Gross profit for the first six months of 2019 was $12.0 million, contrast with $16.7 million in the first six months of 2018.

Net loss attributable to China Finance Online for the first six months of 2019 was $5.7 million, contrast to a net loss of $9.5 million in the first six months of 2018.

Fully diluted losses per ADS attributable to China Finance Online was $0.25 for the first six months of 2019, contrast with fully diluted loss of $0.42 for the first six months of 2018.

As of June 30, 2019, total shareholders’ equity of China Finance Online was $30.1 million. Total cash and cash equivalents, short-term and long-term investments were $9.6 million.